IN-DEPTH: Where's the rest of The Banks?

Project leader says, 'The grand slam is yet to come'

Feb. 7, 2014

A view of The Banks looking down East Freedom Way, with Paul Brown Stadium in the background / The Enquirer/Joseph Fuqua II

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Cincinnati’s vision for its riverfront was a bustling shopping and entertainment district that would buzz 24/7 with office workers, residents, diners, tourists and shoppers.

Fifteen years later, The Banks gets credit for injecting what Reds owner Bob Castellini called “a dust bowl” with new life and vibrancy. It’s pumped $92 million a year into the economy – even without all of its originally planned features, one study showed.

Last Saturday night, couples celebrated their anniversary at Ruth’s Chris Steakhouse, a group of dads and kids scooped up Orange Leaf yogurt after ice skating on Fountain Square and some people waited almost two hours for a table at The Yard House.

But not every restaurant was bustling. Enquirer interviews and research show some businesses at The Banks are struggling – and they say one key to fixing the development is bringing in the missing pieces that were once envisioned.

Mahogany’s has fallen behind on a loan to the city and owes money to the state for sales tax payments and workers’ compensation policies. Johnny Rocket’s missed payroll last week, according to its owner. And the owner of W.G. Bar and Grill told The Enquirer he’s having “a tough time.”

With less than a quarter of The Banks built, even supporters acknowledge the full promise of the project has yet to be realized. Challenges along the way – notably the nationwide collapse of the condo market – forced developers to make hard choices.

A look at the 18-acre site, sandwiched between Hamilton County’s two riverfront stadiums, shows key planned pieces of the project are missing.

There’s no hotel. Or office tower. There’s no dry cleaner or grocery store or gym. A retail space in the first phase is yet to be filled.

What’s planned at The Banks?1A: Office building, not started | 1B: Hotel, not started | 1C: Restaurant or other retail, not started | 2A: Planned luxury apartments, with ground-level retail | 2B: Planned as office space, although this could change. | 3: Discussion for these parcels hasn't started; what's built could be different than this rendering.

The next phase of 291 apartments and 19,000 square feet of street-level retail is due to start any day, but the official agreement between the county and developer hasn’t been signed yet because the Bengals have objected to an 8-foot decorative roof element.

By the time the second phase is complete, taxpayers will have spent $127.7 million and private investors will have spent $165 million. Additional phases – not yet planned out – could bring up to $855 million more in public and private investment.

“It was a dust bowl,” said Bob Castellini, who owns the Cincinnati Reds and is credited with gathering the power players who created the current master plan. “I’m just delighted with what’s happening before and after games” at Great American Ball Park near The Banks. “It makes you proud.”

Perhaps the most telling sign of success so far: Carter USA last month sold Current at the Banks apartments and the retail underneath it to Nicol Investment Co. and Lot 17, where the Yard House Restaurant is located, to Spirit Master Funding, for $88.2 million, just two years after project completion. And there are still 350,000 to 400,000 square feet left to be developed, and eventually sold, by Carter in the first phase.

“The fact is, The Banks is in its infancy, with perhaps not even a third of the development complete,” said Nicol owner Mark Nicol. “And already, there is a waiting list to live there, some of our restaurants have hourlong waits, and there’s a list of retailers that are interested in locating at The Banks, so we have the luxury of being selective.”

County Commissioner Greg Hartmann said he’s not ready to call it a success. “In the big picture we still have a lot of work to do,” he said. “We don’t have people working down there, we don’t have tourists staying overnight.”

What was envisioned and what's there

As the second phase gets underway, The Enquirer talked to experts and compared what’s happened on the riverfront with what was outlined in the grand plans unveiled in 1999 and fleshed out in 2007.

RESTAURANTS, BARS AND OTHER RETAIL

What we have now: A restaurant district with a 13 eateries and bars, taking up 95,000 square feet.

John and Stephanie Cassidy drove 50 miles from Preble County to go to Toby Keith’s I love This Bar and Grill.

“We eat somewhere different every time,” said John, 35. “There’s a great atmosphere. Cincinnati has needed something like this for years.”

It was busy last Saturday night, but there were problems last year when the restaurant fell behind on its rent, racking up a $121,000 bill, according to a lawsuit. Owners contended Carter violated the lease by allowing another live country music venue – Tin Roof – to open at The Banks. The dispute was settled and dismissed.

Adam Lister, Toby Keith’s head of security, said his bar is popular on Saturday nights, but said “I don’t think The Banks has quite become a destination – yet.

“It’s not like Mount Adams used to be or Over-the-Rhine is now,” he added.

Mahogany’s owner Liz Rogers said she is not the only restaurant at The Banks struggling to draw in customers during this particularly bad winter. “I love being on The Banks, but we’re more of a destination right now,” she said. She expected to locate in a community.

“When I signed the lease I was told there would be certain things that never happened,” Rogers said. “I would like to see more retail, a hotel, a movie theater.”

In addition to trouble at Mahogany’s, Rick Thompson, the owner of Johnny Rockets, said his business is struggling.

Last Friday, dinner hour brought four customers. He closed early.

“This is an event-driven area,” he said. “If there’s not an event, there is no business. It’s not adequate to get by.”

Kathleen Norris, retail expert who helped recruit many of businesses in Over-the-Rhine’s Gateway District, said The Banks is a difficult location to put retail in.

“The population is very thin right now,” she said. “There is no natural core audience for retail.”

Down the road: Filling the single retail space that has been built, but isn’t occupied. Finding tenants for the retail space on the first floor of the upcoming apartment complex.

A HOTEL DEVELOPMENT

Envisioned: A 200,000-square-foot to 400,000-square-foot hotel with 150-200 rooms.

What we have so far: Carter USA hasn’t been able to find the right hotel. Tom Gabelman, the lawyer hired by Hamilton County to make The Banks a reality, said the city and county have been “working diligently with Carter to find the right hotel for that site.”

“What we’ve tried to do is not sacrifice the quality and sustainability for a quick fix,” Gabelman said. “It is one of the best hotel sites in the city.”

There was a possibility of a budget hotel, but county leaders didn’t think it offered the right level of service “for what was basically the front door to the city and would be the first hotel on this side of the city,” Gabelman said. “We don’t want it to look like the kind of hotel you would see off a highway exit.”

Sotiris Hji-Avgoustis, chairman of Family and Consumer Sciences at Ball State University and an expert on hospitality and tourism, said the biggest hurdle is likely height limitations.

For investors to recoup their money, hotels typically need to have more than 400 rooms, he said. The height limits – outlined in a deal between the county and the Bengals – would likely limit any hotel to 200 rooms.

“They will have to spend same amount of money on marketing, but the potential reward would be much less,” Hji-Avgoustis said.

Down the road: Continued work to draw a hotel here.

CONDOMINIUMS

Envisioned: 1 million to 1.8 million square feet of apartments and condominiums that would be home to 3,000 people.

What we have so far: No condos, but a 300-unit apartment building. Just as The Banks was launching, the condo market bottomed out, Gabelman said. “We would have had to have 100 percent pre-sold in order to build,” Gabelman said. “That’s why we moved on to apartments.”

Carter Executive Vice President Scott Stringer said when the project was first proposed in the 1990s, Cincinnati was seeing a a lot of condominium activity. “But when you look back at the timing – 2006, 2007, 2008 – the market started deteriorating. So as a practical matter we had to change our strategy.”

At this point, condos would be “far better for The Banks at this stage in the game,” said Lee Robinson, a broker at Robinson Sotheby’s International Realty. “I fully understand why they had to do apartments some years back; that was a good, appropriate move at the time.

“Right now I would say it’s not,” added Robinson, a member of the Waterfront Advisory Council. “You don’t just want all apartments, you want people to have a vested interest in the Central Business District.”

Down the road: The about-to-be-built luxury apartment building, in which units will feature hardwood floors, stainless steel appliances, and granite countertops. Gabelman said condos remain a part of future phases.

Aaron Nimrick, 22, a Procter & Gamble employee who lives at The Current, likes the “big-city feel,” that’s still “secluded.”

He looked at other Downtown apartments and said The Current was the nicest by far, with hardwood floors, marble counters, parking, washer and dryers in the residences and a pool.

“It was much newer, much nicer,” he said.

He said he’ll move only when he’s ready to buy property. And if he could buy a condominium at The Banks, he would.

OFFICE SPACE

Envisioned: 200,000 square feet to 1 million of square feet of office space where 1,000 to 4,000 people would work.

What we have so far: Carter USA is seeking a tenant that would fill a 10-story building where 1,000 to 1,500 people would work. Gabelman said the recession played a role in the delay here, too. Another issue: The Great American Tower. Downtown businesses moved there, leaving an excess of Class A – the most luxurious – office space Downtown.

Right now, 3 million square feet of Downtown’s total 18 million square feet of office space is vacant – a 17 percent vacancy rate.

Look at just Class A office space and that vacancy rate jumps to 21.5 percent – about two percent to three percent higher than other cities similar in size to Cincinnati, said John Schenk, senior vice president of Colliers International, a commercial real estate firm..

There are a limited number of tenants large enough to lease the building,” he told The Enquirer. “You’re going to have to need to lease 50 to 75 percent in order to obtain financing.”

A new building costs $8 to $10 more per square foot, per year, than leasing in an existing building. “That also limits the number of tenants who are interested. At those prices the tenants are typically headquarter tenants instead of a regional office.”

Consumer research firm dunnhumby flirted with locating at The Banks, but ultimately chose to build at Fifth and Race streets – closer to its partner Kroger.

One possibility for a new tenant at the Banks is the University of Cincinnati’s College of Law. UC officials say they haven’t decided on a site yet for an expansion that cost $30 million or more.

UC Board Chairman Fran Barrett emphasized that he’s seen no firm proposals that would make the project work financially.

Advantages would include access to Downtown courts and law firms. But a Downtown location also could restrict the ability of students from other UC colleges to take law-school classes, and law students to take courses in business or the humanities.

UC would need financial help to move downtown, probably in the form of public incentives, Barrett said. ■

I’m your Hamilton County watchdog. I tell you what your elected officials are doing and keep track of how they spend your tax dollars. Email me at scoolidge@enquirer.com